Finding an alter ego corporation to an individual judgment debtor can be a very effective collection tactic. Consider the situation where the debtor owns his or her own business and draws no salary and deposits no funds in his or her personal bank account. Obviously the debtor has access to income because he or she is surviving, buying food, maintaining a home, etc. From a collection standpoint, you could garnish the debtor's salary but the business will answer no salary is being paid and you will be arguing the truth of that in court for months with no relief for your client. The debtor's bank account will also be empty because all personal expenses are being paid directly from the business to protect his or her assets from you. So what can you do?
Collection of a judgment, I often tell my clients, is the hard part of the litigation process. Obtaining a judgment against the debtor can often be rather easy to achieve in litigation, especially when a debtor fails to respond to the lawsuit. The real challenge for a creditor and its attorney is attempting to collect on that judgment. Unfortunately, rarely does a judgment debtor receive the judgment and immediately send payment. Instead, the creditor needs to be prepared to chase that debtor to obtain payment.
Garnishment is one of the most effective ways for a collections attorney to recoup funds for his or her clients. In the most recent legislative session, the Florida legislature has amended Chapter 77 of the Florida Statutes governing garnishment proceedings. The most notable change is that the amendment repeals Florida Statutes §222.12 which provided the procedure by which a creditor could challenge a claim of exemption as head of his or her household.
Welcome to my website blog. My goal is to address collection issues including collecting on unpaid invoices, accounts receivables, promissory notes and other debts. I will also highlight important changes in Florida law and notable cases. If anyone reading this blog has any specific questions, please feel free to e-mail me the question and I will try to address same.